USD/JPY Weekly Price Forecast – US Dollar Continues to Slump

The US dollar has initially rally during the course of the week but gave back the gains to turn around and fall towards the ¥104 level yet again. Ultimately, what we are seeing is over the last several weeks that any time there is a short-term rally, the sellers come in and push lower. This has form a third inverted hammer in a row, suggesting that we are in fact eventually going to break down. The ¥104 level has been crucial, and therefore it does make sense that we continue to see a lot of action around this level. However, if we can break down below the bottom of the candlestick from the previous couple of weeks, it opens up a move lower.

USD/JPY Video 14.12.20

At that point, the ¥103.25 level is likely to be targeted and supportive, but if we can break down below that level then the move to the ¥102 level would be the target. The ¥102 level has seen significant buying in the past, and of course by the time we get down to that area it is likely that the Bank of Japan would start to lose its sense of humor when it comes to the exchange rate. That being said though, with stimulus coming out of the United States, it is very possible that the dollar continues to slide although that does not mean that we need to break down immediately as you have seen the slow grind of this pair lately. We are most certainly in a downtrend, so do not have any interest in buying anytime soon.